01 Dec, 2023 04:11 PM

Pay Commission on Hold: Govt Prioritizes Pension System Over 8th Pay Commission

Pay Commission on Hold: Govt Prioritizes Pension System Over 8th Pay Commission

In a move that signifies a shift in approach, the government has announced it has no plans to establish the Eighth Pay Commission for central government employees and pensioners before the general elections next year. This marks a departure from the past practice of using pay commissions as a tool to appease voters during election season.

Finance Secretary TV Somanathan confirmed that there is “nothing in the offing” regarding the Eighth Pay Commission, stating that it is “not due at present.” This statement comes in stark contrast to previous election cycles, where governments often used the establishment or implementation of pay commissions to gain favour with central government employees, armed forces personnel, and family pensioners.

Instead of focusing on a new pay commission, the government is currently directing its attention towards a review of the National Pension System (NPS). This scheme, which replaces the old defined benefit pension scheme, requires employees to contribute 10% of their basic salary, while the government contributes 14%. However, the NPS has faced criticism for its reliance on employee contributions and variable returns, with some even calling it unfair. This discontent has led several opposition-ruled states to revert to the older pension scheme, which guarantees pensioners a fixed monthly amount based on their last drawn salary.

To address these concerns and find a more sustainable solution, the government set up a committee led by the Finance Secretary to review the NPS. The committee has already completed consultations with all stakeholders and is expected to submit its report soon. Based on its recommendations, the government may implement changes to the NPS to ensure that employees receive at least 40-45% of their last salary after retirement.

This move away from a pre-election pay commission and towards a focused review of the NPS signifies a change in the government’s approach to managing its finances. Rather than resorting to short-term, populist measures, the government appears to be prioritizing long-term financial stability and seeking sustainable solutions for employee benefits.

While some may view this decision as a disappointment, it indicates a potentially more responsible approach to managing the country’s finances. The government’s focus on the NPS review suggests a commitment to addressing the concerns of employees and finding a solution that is fair and sustainable in the long run.

Only time will tell whether this shift in approach will be successful. However, it is undoubtedly a significant change from past practices and one that deserves careful attention as the government navigates the challenges of balancing fiscal responsibility with the needs of its employees.


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